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  • Brittany Besler

What does the future hold? Hopefully not estate taxes.

Planning for the future is never easy, but in 2020 it seems to be even more difficult than usual, although I guess that is the standard for this year. As we reflect on the year, and prepare for what the future may hold it is a great time to revisit your estate planning. If you do not have a current estate plan, it may be exceedingly important to put one in place now. With a potential change in the white house, we can only guess how that will translate to tax reform. While we have some inclination of some of the provisions that representatives will try to push forward, taking advantage of the current estate tax exemption can prove to be vital. Any assets you own at your death in excess of these tax exemptions will be subject to a 40% tax on its fair market value.

Currently, the estate tax exemption is at an all time high at $11,580,000, and is scheduled to decrease to $5,000,000 (indexed for inflation) as of December 31, 2025. The Biden tax plan calls for reducing the federal estate tax exemption to $3,000,000. This means that in 2021 there is potential to experience a $8,580,000 reduction in the exemption. To put that in terms of actual dollars, if you were to die on January 2, 2021, with an estate of $20 million, your estate would pay a little over $3.4 million more in taxes than would be due if you had died on December 31, 2020.

There are various strategies to employ to preserve your wealth and ensure you pass it on to the next generation with minimal estate tax implications. Reach out to Besler Law for your estate planning needs.

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